Certain options contracts tend to be restricted at least in part because of the requirements for options contracts obtained as a means of employment compensation. For example, during the “dot-com boom” when start-up initial public offerings (IPO's) were widespread, options contracts were often used as a primary source of compensation. Such compensatory options contracts were given to employees by his or her employing company. The options contracts gave the employee the right to purchase up to a specific number of the employing companies stock at a certain price or strike price. Companies using options as a compensation device were able to decrease cash out-flow while increasing an employee's desire to see the company succeed. If the company succeeded, the compensatory options contracts would increase in value and the employee would incur relative profits when he or she exercised the option contracts.
However, the exercising of compensatory options contracts usually included limitations not found in basic options contracts. These limitations were included in order to meet specific goals of the employing company. Such goals included stock price stabilization and capital preservation. One common limitation was a time limitation that prohibited employees from exercising an options contract until a certain amount of time had passed. On the other hand, advantages over basic options contracts were present in compensatory options contracts. One common example was the elimination of an expiration date or the increase in time that the compensatory option contract could be exercised.
Future contracts are well known in the art and are recognized as the duty for one party to purchase or sell an underlying commodity to another party at a specific date or delivery date. Options contracts are also well known in the art and are recognized as the right of a party to purchase or sell an underlying security at a specific date for a specific price.
It would be desirable to improve market liquidity and introduce a novel securities exchange mechanism that would allow for alternative investment hedging techniques and speculation by providing systems and methods for providing futures contracts on options contracts.